Markets

Here’s Why Acceleron Pharma Stock Fell 12% in September

What happened

Shares of Acceleron Pharma (NASDAQ: XLRN) fell 12% in September, according to data provided by S&P Global Market Intelligence, after the biotech reported disappointing results for its drug candidate ACE-083 in patients who have facioscapulohumeral muscular dystrophy (FSHD).

So what

Interestingly, the drug increased total muscle volume in the FSHD patients, but that didn't translate into improvements in functional tests. In other words, the patients gained muscle, but weren't any stronger.

FSHD is characterized by muscle weakness, so gaining strength, rather than just muscle, is obviously important.

Given the disappointing phase 2 data, Acceleron doesn't plan to continue development of ACE-083 in patients with FSHD.

Scientist working in a laboratory

Image source: Getty Images.

Now what

Acceleron Pharma is also testing ACE-083 in Charcot-Marie-Tooth (CMT) disease, a group of disorders that affect nerves, which results in muscle atrophy and weakness. The phase 2 study is expected to read out in the first quarter of next year.

Based on the FSHD study, it's possible that the drug might be helping patients grow muscles that aren't functional, although management noted that CMT has a different pathophysiology than FSHD, so perhaps Acceleron will see different results.

Fortunately, these are midstage studies that are relatively cheap to run compared with large phase 3 studies, so if the drug is going fail, this is the time to do it.

No matter what the fate of ACE-083, Acceleron still has its lead molecule luspatercept that treats myelodysplastic syndromes (MDS) and beta-thalassemia. It is under Food and Drug Administration review with a target action date of Dec. 3, 2019, for beta-thalassemia and April 4, 2020, for MDS. While a positive sign that ACE-083 is working would be great, investors should stay focused on luspatercept since it represents most of Acceleron's value and near-term growth.

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Brian Orelli and The Motley Fool have no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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